2 tech firms shun inside Defense game

Still, well-established defense contractors have their own Hill backers and have enlisted their help in staving off new competitors. Rep. Mike Rogers (R-Ala.), a Lockheed supporter, included language in his Strategic Forces subcommittee markup that said “the Air Force should continue the current block buy contract” for its launch program. But that language was quietly stripped from the full committee version — a win for SpaceX.

Even as backers of Palantir and SpaceX rail against the existing system, the companies are learning to play the inside game. Both have ramped up their lobbying spending. In the past year, SpaceX has nearly doubled its lobbying dollars, spending $174,000 in the first quarter of 2014 and hiring three new outside lobbying firms.

Text Size

Palantir’s push came in 2013, when the company boosted its lobbying spending to more than $1.1 million, an increase of nearly 90 percent from the prior year.

Even so, the numbers pale in comparison to the lobbying of companies like Lockheed Martin and Boeing, which each spent more than $14 million in 2013.

Loren Thompson, a defense industry consultant whose clients include Lockheed, said he doesn’t think SpaceX has an inherent disadvantage taking on ULA, because “whatever it lacks in terms of Washington connections it makes up for in agility.”

“I’m not convinced that SpaceX will ever be a major player in launching military satellites,” Thompson said. “However, I think the difficulty that an entrepreneur like Musk faces breaking into this system does raise questions about the federal acquisition culture.”

Perhaps the greatest challenge that comes with taking on the military is potentially losing a lucrative customer. SpaceX has filed suit against the Air Force, but it still has every intention of making the service a customer.

The company, established in 2002 by PayPal co-founder Musk, is working with the Air Force to get its rockets certified for military launches.

At an event last week, Gwynne Shotwell, SpaceX’s chief operating officer, said newer companies face an inherent disadvantage. SpaceX, which declined to be interviewed for this article, has argued that the Air Force is overpaying for ULA’s services and could save money with SpaceX technology.

“The Air Force is comfortable with ULA,” she said. “Of course we’re at a disadvantage: They have more money to spend on lobbyists; they have more money to spend on marketing.”

But Michael Gass, who heads ULA, disagreed.

“In most circles, people would say there’s a curse of the incumbent,” Gass said in an interview. “A new entrant can promise things. … They can advertise prices without a whole lot of transparency.”

For its part, Palantir, founded in 2004 — also by PayPal alums — has based its case on the superiority of its product.

The company’s advocates argue its software has gotten good reviews from some intelligence analysts in Afghanistan who used it to sift through data on enemies suspected of planting roadside bombs.

Hunter, Palantir’s congressional backer, has contended that the Army has made it difficult for soldiers to get Palantir’s software — even when their commanders requested it — and has highlighted failures with the service’s multibillion-dollar program of record, the Distributed Common Ground System, built by big-name defense companies.

Palantir has had some successes. Congress slashed funding for DCGS in its 2014 appropriations measure, and Army acquisition chief Heidi Shyu made a trip to Palo Alto to meet with company executives.

“While in general we do not comment on these issues, it is accurate that our commercial growth is outstripping our growth in government,” Palantir said in a statement. “Reform of the acquisition process in the federal space is something that would benefit not just Palantir but our society as a whole.”